Dell Q2FY12 Earnings

Michael Dell Brian GladdenChairman and CEO SVP and CFO

Brad AndersonSVP, Enterprise Solutions Group

August 16th, 2011

Dell 2Q FY12Performance Review

2 Dell Investor Relations – 2Q FY12 Performance Review See Financial History at www.dell.com\investor

Forward-Looking StatementsSpecial Note on Forward Looking Statements:

Statements in this presentation that relate to future results and events (including statements about Dell’s future financial and operating performance, anticipated customer demand, global market trends, customer market focus, sales structure strategies, enterprise solutions strategies, component costs, cost controls, supply chain improvements, strategic investments and timing of the close of the Force10 Networks acquisition, as well as the financial guidance with respect to revenue and non-GAAP operating income) are forward-looking statements and are based on Dell's current expectations. In some cases, you can identify these statements by such forward-looking words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “confidence,” “may,” “plan,” “potential,” “should,” “will” and “would,” or similar expressions. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors, including: intense competition; Dell’s cost-cutting measures; Dell’s ability to effectively manage the growth of its distribution capabilities and add to its product and services offerings; Dell’s ability to effectively manage periodic product and services transitions; weak global economic conditions and instability in financial markets; Dell’s ability to generate substantial non-U.S. net revenue; weak economic conditions and additional regulation affecting Dell’s financial services activities; Dell’s ability to achieve favorable pricing from its vendors; Dell’s ability to deliver consistent quality products and services; Dell’s reliance on third-party suppliers for product components, including reliance on several single-sourced or limited-sourced suppliers; successful implementation of Dell’s acquisition strategy; Dell’s product, customer, and geographic sales mix, and seasonal sales trends; access to the capital markets by Dell or its customers; loss of government contracts; the risk of temporary suspension or debarment from contracting with U.S. federal, state and local governments as a result of settlements of an SEC investigation by Dell and Dell’s Chairman and CEO; customer terminations of or pricing changes in services contracts, or Dell’s failure to perform as it anticipates at the time it enters into services contracts; Dell’s ability to obtain licenses to intellectual property developed by others on commercially reasonable and competitive terms; information technology and manufacturing infrastructure disruptions or breaches of data security; Dell’s ability to hedge effectively its exposure to fluctuations in foreign currency exchange rates and interest rates; counterparty default; unfavorable results of legal proceedings; expiration of tax holidays or favorable tax rate structures, or unfavorable outcomes in tax audits and other compliance matters; Dell’s ability to attract, retain, and motivate key personnel; Dell’s ability to maintain strong internal controls; changing environmental and safety laws; the effect of armed hostilities, terrorism, natural disasters, and public health issues; and other risks and uncertainties discussed in Dell’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for its fiscal year ended Jan. 28, 2011. In particular, Dell’s expectations with regard to revenue and non-GAAP operating income for the full fiscal year ending Feb. 3, 2012 assume, among other matters, that there is no significant decline in economic conditions generally or demand growth specifically, no significant change in product mix patterns, continued successful management of lower-margin businesses, continued successful demand planning and forecasting, no supply chain disruptions, and no significant adverse component pricing or supply movements. Dell assumes no obligation to update its forward-looking statements..

Non-GAAP Financial Measures

This presentation includes information about non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share (collectively the “non-GAAP financial measures”), which are not measurements of financial performance prepared in accordance with U.S. generally accepted accounting principles. We have provided a reconciliation of the historical non-GAAP financial measures and of free cash flow, which is also a non-GAAP measure, to the most directly comparable GAAP measures in the slides captioned “Supplemental Non-GAAP Measures.” A detailed discussion of our reasons for including the non-GAAP financial measures and the limitations associated with those measures is presented in” Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations - Non-GAAP Financial Measures” in Dell’s annual report on Form 10-K for the financial year ended January 28, 2011. We encourage investors to review the historical reconciliation and the non-GAAP discussion in conjunction with our presentation of the non-GAAP financial measures.


Dell 2Q FY12Earnings Review

Brian GladdenSVP and CFO


Next Gen Computing Solutions & Intelligent Data Management

Services, Security & Cloud

Virtualization, vStart, AIM Systems Management, Modular

Data Centers, NetworkingFluid Data Architecture, SAN & Scale-out NAS, Deduplication

Multi-Vendor Support, BPO & Applications, IT

Infrastructure OutsourcingSecurity & CloudITaaS, SaaS, PaaS

Flexible & Optimized Value Chain

Mobility SolutionsTablets & SmartphonesDesktop Virtualization

Balanced Liquidity, Profitability & Growth

> 5-7% Rev. Growth

7%+ GAAP OpInc

CFOps > Net Income

End-UserComputing

Efficient IT SolutionsOpen, Capable, Affordable

Long-Term Value Creation

End-UserEnterprise Stakeholders

Executing a growth strategyBuilding enterprise solutions that drive efficiency and flexibility for the virtual era


Enterprise Solutions and Services: Revenue up +4% Y/Y to $4.6B and we continue to see strong demand for our server, Dell storage and services businesses

Significant and thoughtful investments: Develop and acquire industry leading intellectual property in systems management, storage, security and networking

Executing against our strategy: Cost initiatives and focus on higher value products with Dell owned IP is driving strong product margins, outstanding operating income and excellent cash flow generation

Balanced Liquidity, Profitability and Growth: Consolidated revenue of $15.7B up +1% Y/Y. Non-GAAP OpInc up +52% Y/Y, EPS up +69% Y/Y, record CFOps of $2.4B

2Q FY12 Highlights


2Q'11 1Q‘12 2Q‘12 Y/Y Growth

SeqGrowth

Units (thousands) 11,604 10,918 11,573 0% 6%

Revenues 15,534 15,017 15,658 1% 4%

Gross Margin 2,671 3,511 3,625 36% 3%GM % of revenue 17.2% 23.4% 23.2% 600 bps -20 bps

Operating Expenses 1,799 2,135 2,297 28% 8%Opex % of revenue 11.6% 14.2% 14.7% 310 bps 50 bps

Operating Income 872 1,376 1,328 52% -3%OpInc % of revenue 5.6% 9.2% 8.5% 290 bps -70 bps

Income Before Taxes 823 1,334 1,273 55% -5%

Income Tax 194 284 267 38% -6%Effective Tax Rate % 23.6% 21.3% 21.0% -260 bps -30 bps

Net Income 629 1,050 1,006 60% -4%NI % of revenue 4.0% 7.0% 6.4% 240 bps -60 bps

Diluted EPS $0.32 $0.55 $0.54 69% -2%

2Q FY12 Non-GAAP Consolidated Results

$ in Millions – except Units and EPSConsolidated P&L1

Revenue up +1%, to $15.7B

Gross margin of 23.2% driven by continued cost execution, disciplined pricing, and ongoing shift to higher value Dell technologies

Opex of $2.3B or 14.7% of revenue, driven by mix shift to selling more Dell technologies and higher incentive based compensation

Operating income up +52%, to $1.3B or 8.5% of revenue

Interest & other expenses were $55M

Tax rate was 21.0%

EPS 54 cents, up +69%1Percentages and ratios are calculated based on underlying data

Growth refers to year-over-year


2Q FY12 Non-GAAP Key Performance Metrics

Revenue Operating Income

EPSOperating Income %

Operating Expense

Gross Margin %

15.5 15.0 15.7

0.0

6.0

12.0

18.0

2Q'11 1Q'12 2Q'12

$ Billions +1% Y/Y+4% seq

0.91.4 1.3

0.00.30.60.91.21.5

2Q'11 1Q'12 2Q'12

$ Billions +52% Y/Y-3% seq

1.8 2.1 2.3

0.00.51.01.52.02.5

2Q'11 1Q'12 2Q'12

$ Billions +28% Y/Y+8% seq

17.223.4 23.2

0.0%5.0%

10.0%15.0%20.0%25.0%

2Q'11 1Q'12 2Q'12

% +600bps Y/Y-20bps seq

5.69.2 8.5

0.0%2.0%4.0%6.0%8.0%

10.0%

2Q'11 1Q'12 2Q'12

% +290bps Y/Y-70bps seq

0.320.55 0.54

0.00

0.20

0.40

0.60

2Q'11 1Q'12 2Q'12

$ +69% Y/Y-2% seq


2Q FY12 Cash Flow Performance

Record CFOps in the quarter of $2.4B; $5.2B trailing twelve months CFOps

FCF of $2.3B; $5.1B trailing twelve months FCF

Share repurchases of $1.1B

Ended 2Q FY12 with $16.2B cash and investments

CFOps > NI continues to be a top priority

R&D of $205M, or 1.3% of revenue

Capex of $159M

1Trailing Twelve Months 2Cash flow from operations less capital expenditures plus on balance-sheet fundings

Cash Flow from Operations 1

Free Cash Flow 1,2

$2.5B $3.4B

$3.9B $3.4B $3.6B $3.8B $4.0B $4.2B

$5.2B

2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

$2.8B $3.9B

$4.6B $4.3B $4.4B $4.3B $4.2B $4.1B $5.1B

2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12


2Q FY12 Working Capital

Days payable favorably impacted by 5 days to 86 days, driven by linearity and increased contract manufacturing volume

Days sales increased to 42 days due to typical seasonality

Days inventory stays flat at 10 days

CCC improved by 3 days on a sequential basis

Continue to expect CCC to remain in mid -30 day range.

Cash Conversion Cycle (CCC)

41 41 40 4042

2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

DSO

109 9

10 10

2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

DSI

8782 82 81

86

2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

DPO

-36 -32 -33 -31 -34

2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

CC

C


1,021 966 1,021 856 936

13.8%13.2%

14.7%

13.1% 13.0%

2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

Originations

Penetration %

2Q Originations down year over year primarily driven by increased competition in large commercial accounts and lower Consumer revenue mix

Managed basis losses and delinquency continue to trend favorably; all business segments showing improvement from the prior quarter and the prior year

New Financing Originations* Losses & Delinquencies$ Millions

1 Managed Charge-off % equals gross principal charge-offs less recovery payments from customers for the quarter divided by the average managed assets for the quarter2 Managed Delinquency % is calculated as 60 day plus delinquent assets at quarter end divided by quarter end managed assets*Effective 2Q FY12, Dell Financial Services Canada is included in results; Penetration % is now % of U.S. & Canada Dell revenue that is financed by DFS

Definitions

1 2

2Q FY12 Dell Financial Services

6.7% 7.3% 6.5%5.3% 4.6%

3.2% 3.8% 3.4% 2.7% 2.6%

2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

Managed Charge-off % Managed DQ %


Services revenue grew +6% to $2.0B; Services backlog is now $15.4B

Client hardware revenues up +6% sequentially and down -1% Y/Y driven by Public business; significantly improved gross and operating margins while managing through a lower cost deflation environment in the quarter

Storage revenue was down -20%; EMC revenue down -62%; Dell-owned IP, including Compellent, EqualLogic, PowerVault and DX Object Storage, grew revenue +15%

Software and peripherals revenue was up +1% to $2.6B

2Q FY12 Line of Business ResultsProduct Revenue Trends

LOB 2Q'11 3Q'11 4Q'11 1Q‘12 2Q‘12Servers & Networking 1,890 1,844 2,090 1,973 2,054Storage 624 543 574 481 502

Dell-owned IP 340 315 348 341 393Services 1,915 1,924 1,943 1,984 2,036S&P 2,535 2,579 2,651 2,567 2,569Mobility 4,700 4,858 4,850 4,716 4,761Desktop PCs 3,870 3,646 3,584 3,296 3,736

Total 15,534 15,394 15,692 15,017 15,658Revenue Trends Q/Q

Servers & Networking 6% -2% 13% -6% 4%Storage 13% -13% 6% -16% 4%

Dell-owned IP 11% -7% 10% -2% 15%Services 1% 0% 1% 2% 3%S&P 2% 2% 3% -3% 0%Mobility 3% 3% 0% -3% 1%Desktop PCs 8% -6% -2% -8% 13%

Total 4% -1% 2% -4% 4%Revenue Trends Y/Y

Servers & Networking 35% 20% 16% 11% 9%Storage 13% 7% -4% -13% -20%

Dell-owned IP 35% 33% 20% 11% 15%Services 57% 55% 1% 5% 6%S&P 6% 8% 7% 3% 1%Mobility 21% 16% 4% 3% 1%Desktop PCs 17% 21% 4% -8% -3%

Total 22% 19% 5% 1% 1%

DynamicsGrowth refers to year-over-year


Customer Category

Service Offering Region

Dell Services Revenue Composition Engagement Model by SBU

Projects 10% APJ 10%

EMEA 20%

Americas70%Transactional

56%

Consumer 8%

Public43%

LargeEnterprise

36%

SMB 13%Outsourcing

34%EMEA 20%

Americas 69%

APJ 11%

RegionEngagement Model

Customer Category

Transactional 57%

Outsourcing 34%

Projects 9%

Public 43%

Large Enterprise

36%

SMB 14%

Consumer 7%

100%

90%

55%

40%

6%

29%

53%

4%

16%

7%

0% 20% 40% 60% 80% 100%

Consumer

SMB

LE

Public

Transactional Outsourcing Projects

2Q FY12 Services


Revenue of $1.2B, up +6% Y/Y, with growth driven by commercial customers in EMEA and APJ

Deferred extended warranties was $6.8B

* Services categories were refined in Q1FY12

Revenue of $699M, up +6% Y/Y

Total contract value of new contracts in 2Q is $1B ($1.3B year to date)

Estimated contracted services backlog was $8.6B

Revenue of $187M, up +12% Y/Y

Growth driven by stronger applications and infrastructure project sales

$1,090 $1,083 $1,099 $1,094 $1,150

2Q11 3Q11 4Q11 1Q12 2Q12

Transactional Revenue ($ in Millions)

$657 $674 $667 $703 $699

2Q11 3Q11 4Q11 1Q12 2Q12

Outsourcing Revenue($ in Millions)

$167 $167 $178 $187 $187

2Q11 3Q11 4Q11 1Q12 2Q12

Projects Revenue($ in Millions)

2Q FY12 Services


Revenue from growth markets grew +14% and now account for 28% of Dell’s consolidated revenue

BRIC countries revenue grew +18%

India revenue increased +21% while China revenue grew +20%

APJ and EMEA revenue grew +17% and +1%, respectively, while Americas was down -4%

Revenue outside of the U.S. was 50% of our total mix

2Q FY12 Growth Markets & BRIC CountriesGrowth Markets 1 Dynamics

Growth refers to year-over-year

21% 23% 24% 23% 24% 25% 27% 27% 28%

2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

% of Dell Total Revenue

1 Growth Markets: Exclude US, Canada, Western Europe and Japan

-24%-8%

39% 46% 42%31%

20% 17% 14%

2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

Revenue Growth Y/Y, %


3.3B 3.4B 4.2B 4.2B 4.5B 4.3B 4.7B 4.5B 4.6B 5.2% 5.1%

6.7% 6.7%6.3%

9.2%10.7% 11.3%

9.8%

2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

Revenue & Operating Income

Revenues of $4.6B (up +1% Y/Y)

Operating income was $448M, or 9.8% of revenue, up +350 bps Y/Y

Server revenue up +5% Y/Y

Services revenue up +11% Y/Y

$ in Millions

Large Enterprise P&L

Revenue Mix

Client42%

Servers & Storage 25%

Services 16%

S&P17%

2Q'11 3Q'11 4Q'11 1Q’12 2Q’12

Revenues 4,549 4,326 4,692 4,477 4,584Sequential Growth, % 7% -5% 8% -5% 2%Y/Y Growth, % 38% 27% 12% 5% 1%

Operating Income 288 400 502 504 448Operating Margin, % 6.3% 9.2% 10.7% 11.3% 9.8%Sequential Growth, bps -40 bps 290 bps 150 bps 60 bps -150 bpsY/Y Growth, bps 110 bps 410 bps 400 bps 460 bps 350 bps

Revenues Operating Margin %

2Q FY12 Large Enterprise


Revenue & Operating Income Revenue Mix

Revenues of $4.5B, down -3% Y/Y, up +18% sequentially

Operating income was $484M, or 10.9% of revenue

Client revenue up +34% sequentially with strong sequential demand for servers, storage and services

Public P&L$ in Millions 2Q'11 3Q'11 4Q'11 1Q’12 2Q’12

Revenues 4,580 4,442 3,973 3,767 4,457Sequential Growth, % 19% -3% -11% -5% 18%Y/Y Growth, % 21% 20% 4% -2% -3%

Operating Income 369 451 366 370 484Operating Margin, % 8.0% 10.2% 9.2% 9.8% 10.9%Sequential Growth, bps 30 bps 220 bps -100 bps 60 bps 110 bpsY/Y Growth, bps -210 bps 70 bps 50 bps 210 bps 290 bps


3.8B 3.7B 3.8B 3.9B 4.6B 4.4B 4.0B 3.8B

4.5B

10.1%9.5% 8.7%

7.7% 8.0%

10.2%9.2% 9.8% 10.9%

2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12

2Q FY12 Public

Servers & Storage 15%

Client45%

S&P20%

Services 20%


2.8B 3.0B 3.3B 3.5B 3.5B 3.7B 3.7B 3.8B 3.7B

8.7% 9.5%8.5% 8.9% 9.1%

10.7%12.0% 12.3%

10.9%

2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12


Revenues of $3.7B (up +5% Y/Y)

Operating income was $404M, or 10.9% of revenue

Servers, storage and services grew Y/Y

Revenue Mix

Client55%

Servers & Storage

21%

Services8%

S&P16%

SMB P&L$ in Millions 2Q'11 3Q'11 4Q'11 1Q‘12 2Q’12

Revenues 3,535 3,665 3,749 3,768 3,709Sequential Growth, % 0% 4% 2% 0% -2%Y/Y Growth, % 25% 24% 12% 7% 5%

Operating Income 323 391 450 463 404Operating Margin, % 9.1% 10.7% 12.0% 12.3% 10.9%Sequential Growth, bps 20 bps 160 bps 130 bps 30 bps -140 bpsY/Y Growth, bps 40 bps 120 bps 350 bps 340 bps 180 bps


2Q FY12 SMB



Revenues of $2.9B (down -3% Q/Q and up +1% Y/Y)

OpInc was $73M, or 2.5% of revenue

OpInc of 3.5% in the first half of year

Revenue Mix

Client85%

Services5%

Consumer P&L$ in Millions


2Q'11 3Q'11 4Q'11 1Q‘12 2Q’12

Revenues 2,870 2,961 3,278 3,005 2,908Sequential Growth, % -12% 3% 11% -8% -3%Y/Y Growth, % 0% 4% -8% -7% 1%

Operating Income (21) 0 69 136 73Operating Margin, % -0.7% 0.0% 2.1% 4.5% 2.5%Sequential Growth, bps -120 bps 70 bps 210 bps 240 bps -200 bpsY/Y Growth, bps -380 bps -30 bps 190 bps 400 bps 320 bps

2Q FY12 ConsumerS&P10%

2.9B 2.8B 3.5B 3.2B 2.9B 3.0B 3.3B 3.0B 2.9B

3.1%

0.3%0.2%

0.5%-0.7%

0.0%

2.1%

4.5%

2.5%

2Q'10 3Q'10 4Q'10 1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12


Dell 2Q FY12Enterprise Solutions

Brad AndersonSVP, Enterprise Solutions Group


Intelligent Data Management

Next Generation Computing Solutions

Mid-market design

• SMB Dell-owned IP storage up +27% Y/Y

• EqualLogic remains iSCSIleader

Proven acquisition strategy• Pending Force10

Networks acquisition positions Dell well in data center networking

• Compellent revenue up +97% sequentially

Delivering platforms of the future

• Dell EqualLogic FS7500 launch brings 1st scale out NAS to Dell EqualLogic

• Solution partnership with Cloudera to reduce complexity and cost of Hadoop

Leading virtualization disruptors

• Virtualization growth driving server networking revenue growth of +9% Y/Y

• Customers looking for end to end virtualization solutions

Free to innovate

• Dell OpenStackCloud Solution is 1st available OpenStack cloud solution

• 1st vendor to provide servers in temperatures up to 113° Fahrenheit

2Q FY12 Enterprise Solutions

Networking


Dell 2Q FY12Outlook

Brian GladdenSVP and CFO


Dynamics

Investment in differentiated enterprise solutions and services continued to drive substantial gains in our profitability

Mid-market design focus on enterprise solutions and services is driving mix shift to a higher-value portfolio and resulting in sustainable, improved results

Raising our total year Non-GAAP operating income outlook to +17-23% Y/Y growth from +12-18% Y/Y growth

Based on strategic decisions to redirect resources from lower to higher value solutions and a demand environment that has become more uncertain in light of macroeconomic news, we are revising our FY’12 revenue outlook to +1-5% Y/Y growth from +5-9% Y/Y growth

For 3Q, we see revenue roughly flat vs. 2Q, in line with seasonality over the past two years

Continue to anticipate quarterly interest expense of $70 million, and full-year Non-GAAP tax rate between 21-23%

Key Metrics

Outlook Key Drivers

Revenue up +1–5%Y/Y

Enterprise solutions and services growth

Operating Income (Non-GAAP)

up +17–23% Y/Y

Enterpriserevenue strength

Commercial leverage

End User Computing

Cash Flow CFOps > Net

Income

OpInc $ growth

SustainedCCC

Updated Full Year FY12 Outlook

Outlook


2Q FY12 Corporate Responsibility

Maintained giving at 1 percent of pretax profits.

Dell doubled the number of entries to the Dell Social Innovation Competition in 2Q with 63% coming from outside the US while more than 200 Dell employees served as judges and mentors

Dell team members globally can now make credit card donations to non-profits of their choice that Dell will match up to $10,000 annually

Signed a commitment with the EPA in 2Q to further promote responsible electronics recycling and encourage OEMs to use certified recyclers

Dell has already surpassed our goal of a 10-percent reduction in packaging volume and we maintain plans to eliminate 20 million pounds of packaging material from our shipments by the end of 2012

Interbrand ranks Dell #8 in its Best Global Green Brands survey

Our Communities & Our PeopleOur Planet

Dell’s commitment to our planet, our communities and our people


Dell 2Q FY12Strategy

Michael DellChairman and CEO


Sustained strong growth in operating profits, EPS and Cash Flow demonstrates our strategy is working well

Customers turning to Dell for solutions regardless of the economic backdrop

Continue to identify opportunities in a disciplined way to generate profitable growth

Building a strong track record of successful integrations

Mid-market design focus is driving more innovative thinking

1H Results Validating StrategyExpanding enterprise solutions and services capabilities


Dell 2Q FY12 Supplemental Non-GAAP Measures


Supplemental Non-GAAP MeasuresQ1'10 Q2'10 Q3'10 Q4'10 FY10 Q1‘11 Q2‘11 Q3‘11 Q4’11 FY11 Q1’12 Q2’12

GAAPNet Income 290 472 337 334 1,433 341 545 822 927 2,635 945 890EPS $0.15 $0.24 $0.17 $0.17 $0.73 $0.17 $0.28 $0.42 $0.48 $1.35 $0.49 $0.48

Adjustments

Income before Income TaxesAmortization of Intangibles 39 40 40 86 205 88 87 89 85 349 92 95Severance & Facility Action Costs 185 87 123 86 481 57 24 31 17 129 19 -Acquisition Related - - - 116 116 20 16 23 39 98 53 87Other 1) - - - - - 140 - (72) - 68 - -

Aggregate Tax-adjustments (28) (24) (51) (78) (181) (62) (43) (18) (50) (173) (59) (66)EPS - Diluted $0.10 $0.05 $0.06 $0.11 $0.32 $0.13 $0.04 $0.03 $0.05 $0.24 $0.06 $0.06

Non-GAAPNet Income 486 575 449 544 2,054 584 629 875 1,018 3,106 1,050 1,006EPS $0.25 $0.29 $0.23 $0.28 $1.05 $0.30 $0.32 $0.45 $0.53 $1.59 $0.55 $0.54

1) $40M Legal Settlement, a $100M SEC Settlement and a $72M merger termination fee.


Supplemental Non-GAAP Measures

Q1'10 Q2'10 Q3'10 Q4'10 FY10 Q1'11 Q2’11 Q3’11 Q4’11 FY11 Q1’12 Q2’12

GAAP gross margin 2,168 2,391 2,233 2,469 9,261 2,516 2,586 3,003 3,291 11,396 3,432 3,525

Non-GAAP adjustments:

Amortization of intangibles 26 27 27 71 151 68 70 71 69 278 71 74

Severance and facility actions 65 14 102 55 236 29 14 4 6 53 5 -

Acquisition-related - - - 1 1 1 1 - 2 4 3 26

Other - - - - - - - - - - - -

Non-GAAP gross margin 2,259 2,432 2,362 2,596 9,649 2,614 2,671 3,078 3,368 11,731 3,511 3,625

Percentage of Total Net Revenue:

GAAP gross margin 17.6% 18.7% 17.3% 16.6% 17.5% 16.9% 16.6% 19.5% 21.0% 18.5% 22.9% 22.5%

Non-GAAP adjustment 0.7% 0.4% 1.0% 0.8% 0.7% 0.7% 0.6% 0.5% 0.5% 0.6% 0.5% 0.7%

Non-GAAP gross margin 18.3% 19.1% 18.3% 17.4% 18.2% 17.6% 17.2% 20.0% 21.5% 19.1% 23.4% 23.2%



Q1'10 Q2'10 Q3'10 Q4'10 FY10 Q1'11 Q2’11 Q3’11 Q4’11 FY11 Q1’12 Q2’12

GAAP operating expenses 1,754 1,720 1,656 1,959 7,089 1,997 1,841 1,979 2,146 7,963 2,220 2,379


Amortization of intangibles (13) (13) (13) (15) (54) (20) (17) (18) (16) (71) (21) (21)

Severance and facility actions (120) (73) (21) (31) (245) (28) (10) (27) (11) (76) (14) -

Acquisition-related - - - (115) (115) (19) (15) (23) (37) (94) (50) (61)

Other 1) - - - - - (140) - - - (140) - -

Non-GAAP operating expenses 1,621 1,634 1,622 1,798 6,675 1,790 1,799 1,911 2,082 7,582 2,135 2,297


GAAP operating expenses 14.2% 13.5% 12.8% 13.2% 13.4% 13.4% 11.8% 12.8% 13.7% 12.9% 14.8% 15.2%

Non-GAAP adjustment -1.1% -0.7% -0.2% -1.1% -0.8% -1.4% -0.2% -0.4% -0.4% -0.6% -0.6% -0.5%

Non-GAAP operating expenses 13.1% 12.8% 12.6% 12.1% 12.6% 12.0% 11.6% 12.4% 13.3% 12.3% 14.2% 14.7%

1) “Other” includes legal settlement and a SEC settlement



Q1'10 Q2'10 Q3'10 Q4'10 FY10 Q1'11 Q2’11 Q3’11 Q4’11 FY11 Q1’12 Q2’12

GAAP operating income 414 671 577 510 2,172 519 745 1,024 1,145 3,433 1,212 1,146


Amortization of intangibles 39 40 40 86 205 88 87 89 85 349 92 95

Severance and facility actions 185 87 123 86 481 57 24 31 17 129 19 -

Acquisition-related - - - 116 116 20 16 23 39 98 53 87

Other 1) - - - - - 140 - - - 140 - -

Non-GAAP operating income 638 798 740 798 2,974 824 872 1,167 1,286 4,149 1,376 1,328


GAAP operating margin 3.4% 5.2% 4.5% 3.4% 4.1% 3.5% 4.8% 6.7% 7.3% 5.6% 8.1% 7.3%

Non-GAAP adjustment 1.8% 1.1% 1.2% 2.0% 1.5% 2.0% 0.8% 0.9% 0.9% 1.1% 1.1% 1.2%

Non-GAAP operating margin 5.2% 6.3% 5.7% 5.4% 5.6% 5.5% 5.6% 7.6% 8.2% 6.7% 9.2% 8.5%

1) “Other” includes legal settlement and a SEC settlement



Net TTM Free Cash Flow Q1'10 Q2'10 Q3'10 Q4'10 Q1‘11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12

Cash flow from operations 2,512 2,480 3,367 3,906 3,383 3,642 3,754 3,969 4,196 5,235

Capital expenditure (398) (355) (288) (367) (333) (379) (402) (444) (535) (549)

Financing receivables 483 700 830 1,085 1,266 1,119 988 709 480 375

Net TTM Free Cash Flow $2,597 $2,825 $3,909 $4,624 $4,316 $4,382 $4,340 $4,234 $4,141 $5,061

Net Free Cash Flow Q1'10 Q2'10 Q3'10 Q4'10 Q1‘11 Q2’11 Q3’11 Q4’11 Q1’12 Q2’12

Cash flow from operations 761 1,076 801 1,268 238 1,335 913 1,483 465 2,374

Capital expenditure (80) (99) (70) (118) (46) (145) (93) (160) (137) (159)

Financing receivables 27 352 177 529 208 205 46 250 (21) 100

Net Free Cash Flow $708 $1,329 $908 $1,679 $400 $1,395 $866 $1,573 $307 $2,315

Dell Q2FY12 Earnings

Business

Transcript of Dell Q2FY12 Earnings